The language from both Tehran and Washington seems as bellicose as ever. This week, an Iranian general said aggression against his country will start a "world war" and Democratic presidential hopeful Sen. Barack Obama vowed that if elected he would not allow Iran to box Israel "into a corner."

But a look behind much of the public rhetoric coming from the United States and Iran reveals that both countries, while still bitterly at odds over many issues, are taking increasingly bold steps to foster dialogue.

"America has no choice but to look to Iran for dialogue" to help solve crises in Iraq, Lebanon, the Middle East peace process, and Iran's own nuclear issue, says Sadegh Kharazi, Iran's former ambassador to Paris.

"But they want that dialogue without paying a price," says Mr. Kharazi. "Why does America [on one hand] make positive language, but on another put a lot of sanctions upon Iran? This is a double-standard [so] there isn't any trust on the Iranian side."

Nor is there much trust on the US side, where Iran's nuclear power program is seen as a cover to build nuclear weapons and Iran is accused of aiding Shiite militias in Iraq.

The numerous "signals" crafted by each side are prone to misinterpretation or attacked at home as evidence of "weakness." And the possibilities are complicated by the upcoming US election and the June 2009 contest in which Iran's hard-line President Mahmoud Ahmadinejad will be up for reelection.

The Bush administration has toned down talk of a "regime change" and threats of military strikes, and even floated the idea of staffing the US interests section in Tehran – currently run by Switzerland – with American diplomats for the first time since the 1979-1980 hostage crisis. In July, the US sent senior diplomat William Burns to Geneva to hear Iran give a response to an incentives package to convince Iran to suspend uranium enrichment.

Each side feels today that they can negotiate from a position of strength: Iran's regional influence has risen since the US removed next-door foes Saddam Hussein and the Taliban; the US because it has helped engineer some positive gains in Iraq for the first time in five years. But many suspicions remain.

"I can't predict, but I'm not very optimistic at the moment," says Seyed Mohammad Marandi, the head of North American Studies at Tehran University. "I don't see this administration in Washington having the courage to make significant changes, and I don't think either [US presidential] candidate will do it."

Even the US interests section could be built on misconceptions, he says.

"The Americans think – and this is ridiculous – they will destabilize the [Islamic] system with a handful of diplomats," says Mr. Marandi. "What they don't realize is that [Iran] is a lot more stable than any other US ally in the region. There is no reason to doubt this state will last 30, 40, or 50 more years."

Still, Ahmadinejad's conservative credentials have enabled him to do more than any previous Iranian president since the 1979 Islamic revolution to reach out to the US. His liberal predecessor, Mohammad Khatami, spoke of a "dialogue of civilizations" and the "great American people." But those efforts were blocked by conservative opponents.

Ahmadinejad has written a letter to President Bush, another to the "American people," and said last year in New York that Americans could be "great friends" of Iran. He has also spoken approvingly of American diplomats running the US interests section in Tehran.

Ahmadinejad will be traveling to New York again later this month to address the United Nations. Along with anti-Zionist diatribes, he continues to call on the US to "change its approach" to countries and "respect" Iran.

As Mr. Khatami's efforts to reach out to the West were denounced by hard-liners as a betrayal of the revolution, Ahmadinejad's bona fides are not in doubt. "Now they trust Ahmadinejad, the Revolutionary Guard trusts Ahmadinejad, so they don't fear that he's going to sacrifice or compromise the regime," says an Iranian analyst in Tehran who asked not to be named.

"Ahmadinejad is hell-bent on creating some sort of rapprochement between Iran and America. He sees that as the key to Iran's future," says the analyst.

"Making peace with America will reduce the pressure on the regime," adds the analyst. "It will be the most amazing election campaign boost you could possibly have because this is the golden egg."

Any expectation in the US that Ahmadinejad would suffer automatic defeat next year because of Iran's dire economy was tempered last week by Iran's supreme religious leader.

"Do not think that this year is your last year as head of the government," Ayatollah Sayed Ali Khamenei told the president and his cabinet. "Imagine that this year, plus the four that follow, you will be in charge and plan and act accordingly."

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